IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Determinants of Transport Costs for Inter-regional Trade

Listed author(s):
  • Se-il Mun


  • Yoko Konishi
  • Yoshihiko Nishiyama
  • Ji-eun Sung

Our paper empirically investigates the structure of transport costs for interregional trade, by using the micro-data of freight charge. We focus on road transport, reflecting the fact that trucking has a dominant share in transporting goods between regions in many countries (in Japan, 91.2% of overall domestic freight volume in 2005). An advantage of our method is that our data represent the costs actually incurred by shippers or carriers, unlike those based on indirect information, or constructed data. Another feature of our paper is to consider the cost structure of each shipment. This is in contrast to many other studies using firm-level data. We present a microeconomic model of inter-regional freight transportation based on careful formulation of cost structure in trucking firm and market equilibrium. We consider that output of transportation service is a bundle of multiple characteristics, such as distance (d), volume (q) and time (t). This is different from the conventional definition of output variable in transportation, i.e., the product of quantity and distance (q*d, according to the above notations). We derive the freight charge equation for empirical analysis based on the market equilibrium, which is derived in a similar manner to the hedonic theory. We use the micro-data from the 2005 Net Freight Flow Census (NFFC), in which information on freight charge and other variables for individual shipment (origin, destination, volume, shipping time) are obtained. The data for other explanatory variables such as distance, toll payment and wage are obtained from various sources. By estimating the parameters of freight charge equation, we investigate the effects of various factors on the level of freight charge. We also examine the existence of scale economies with respect to lot size (weight) and long-haul economies: transport cost per unit weight is decreasing with weight; transport cost per distance is decreasing with distance. Main results are summarized as follows. (1) There are very strong scale economy and long-haul economy: elasticity of freight charge with respect to lot size and distance evaluated around the sample mean are -0.55 and 0.60, respectively. Consequently, the unit freight charges have similar values if the values of q*d are the same. This suggests that the conventional definition of output, ton km, turns out to be a good approximation. (2) Degree of market competition (represented by the number of trucking firms per 1000 population) has significant effect on freight charge: elasticity is 0.09.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa13p361.

in new window

Date of creation: Nov 2013
Handle: RePEc:wiw:wiwrsa:ersa13p361
Contact details of provider: Postal:
Welthandelsplatz 1, 1020 Vienna, Austria

Web page:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Allen, W Bruce & Liu, Dong, 1995. "Service Quality and Motor Carrier Costs: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 499-510, August.
  2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  3. Pierre-Philippe Combes & Miren Lafourcade, 2005. "Transport costs: measures, determinants, and regional policy implications for France," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 319-349, June.
  4. Holt, Charles A, Jr, 1979. "Uncertainty and the Bidding for Incentive Contracts," American Economic Review, American Economic Association, vol. 69(4), pages 697-705, September.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p361. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.